Right up front: we don’t purchase and/or hold Cryptocurrency or “crypto” in client accounts at Strivus Wealth Management.  Some of our clients do hold crypto, but they do not own any crypto in accounts under our management. The “why” is very simple. Our business involves assisting clients in the accumulation of long-term wealth, with a level of risk appropriate to that mission, and within our clients’ personal tolerances. Slow and steady growth over time creates winners.

Creating portfolios within the rules and regulations of the U.S. Securities and Exchange Commission (SEC) requires transparency. We caution all investors to understand every asset in their portfolios, and to be able to view them at any time, using a well-known, independent, third-party website. This requires the utilization of publicly traded securities, all held at large custodial firms, such as Schwab, Fidelity, and others, where asset prices are listed at all times.

Investors seeking a faster (more “exciting”) path to wealth are feeling encouraged by a recent Trump Administration announcement that the rules are about to be loosened, allowing purchase of certain previously-unallowed Alternative Investments (Alts) within 401(k) Accounts (and similar Plans at other employer types). The most well-known Alt investment these days is Cryptocurrency, or simply crypto. Crypto hype is everywhere, but crypto understanding is sadly lacking.

Employer-sponsored Retirement Plans are regulated by ERISA, the Employee Retirement Income Security Act of 1974. The law has been amended several times over the years, but its purpose remains the same – to protect employees’ retirement funds through adherence to strict standards of conduct and regulation. ERISA established a fiduciary standard for anyone involved in any significant role with 401(k) Plan Administration and Investing. This strict standard requires execution of Plan-related duties in a manner the law describes as a “prudent man standard.”

Crypto is inherently riskier than publicly traded securities and is not even classified as a security. Instead, crypto is considered property by the IRS, and Capital Gains Taxes are paid on (net) profits made by trading (buying and selling) crypto shares, or “coins.”

Until such time as crypto is accepted as legal tender under the law for all debts, public and private, I believe that it has no place in traditional Retirement Accounts. Investors should be able to invest in what makes them happy, but our interests lie in long-term success.

Count me out for crypto, at least for now. Changes are certainly on the horizon, but caution reigns supreme when the stakes are high.